Indian Pharma Companies to See 9-11% Revenue Growth This Year: ICRA Report
New Delhi [India], September 30: Revenues of Indian pharmaceutical companies are expected to grow by 9-11% in the current financial year, according to a report by rating agency ICRA. This is a slight decrease from the 13-14% growth recorded last year.
The projected revenue growth will be driven by:
- 9-11% growth from the US market
- 7-9% growth from the European and domestic markets
- 11-13% growth from emerging markets
ICRA has maintained a stable outlook for the Indian pharmaceutical industry, supported by steady demand in both export and domestic markets and a comfortable credit profile of key industry participants.
Kinjal Shah, Senior Vice President and Co-Group Head – Corporate Ratings at ICRA, stated, “ICRA expects the operating margins of its sample set of companies to remain stable at 23-24% in FY2025, supported by an increase in revenues, higher contribution of complex generics/specialty molecules, and soft prices of raw materials.”
Growth in the previous fiscal year was impacted by changes in the National List of Essential Medicines (NLEM), which led to a decline in realisations for certain drugs, and an uneven monsoon that affected acute therapy sales.
The overall growth for pharma companies is expected to be supported by:
- Sales force expansion
- Improvement in productivity of medical representatives (MR)
- Widening distribution in rural areas
- New product launches
Despite a minimal price hike granted under NLEM for 2024-25, revenue growth from the domestic market is set to improve by 7-9% in FY2025, compared to 6.4% in FY24.
ICRA’s sample set of companies witnessed a year-on-year growth of 11.7% in revenues, as some players gained market share in chronic therapies and benefited from the introduction of new products.
Doubts Revealed
Pharmaceutical companies -: These are companies that make medicines and other health-related products.
Revenue growth -: This means the amount of money the companies make is increasing.
ICRA -: ICRA is a company that gives ratings and reports on how well other companies are doing financially.
Financial year -: This is a 12-month period used for accounting and financial purposes. In India, it usually starts on April 1st and ends on March 31st of the next year.
US, European, domestic, and emerging markets -: These are different regions where the companies sell their products. ‘Domestic’ means within India, ‘US’ means the United States, ‘European’ means countries in Europe, and ’emerging markets’ are developing countries.
Operating margins -: This is a measure of how much profit a company makes from its sales after paying for costs like making the products and running the business.
Sales force expansion -: This means hiring more people to sell the company’s products.
Rural distribution -: This means making sure the products are available in villages and small towns.
New product launches -: This means introducing new medicines or health products to the market.
